DrumBeat: March 11, 2008
Posted by Leanan on March 11, 2008 - 8:42am
Topic: Miscellaneous
Oil prices rocket close to 110 dollars a barrel
NEW YORK (AFP) - World oil prices continued their record charge Tuesday, rocketing close to 110 dollars amid lingering supply concerns and as the US dollar plumbed fresh lows against the euro.Traders say oil prices have also been propped up because "black gold" is priced in dollars and buyers and speculators armed with stronger currencies than the US dollar are buying up oil contracts.
New York's main oil futures contract, light sweet crude for delivery in April, finished up 85 cents at a record closing high of 108.75 dollars per barrel after hitting an all-time intra day high in earlier trading of 109.72 dollars.
In London, Brent North Sea crude for April delivery settled up 1.09 dollars at 105.25 dollars after earlier jumping to a record intraday high of 105.82 dollars.
"Oil rewrites the record books as the once mighty dollar sinks further into obscurity," Phil Flynn, a market analyst at Alaron Trading, said in a briefing note.
Valero may sell US plants in hard refinery times
SAN DIEGO (Reuters) - Top U.S. refining company Valero Energy Corp said Tuesday it is considering selling nearly a third of its North American refineries amid a U.S. economic slowdown that is crimping fuel demand, and that it is exploring new projects in the Middle East and Asia.The outlook marks a major shift in Valero's strategy after a decade of sterling profits, acquisitions and expansions transformed the San Antonio-based company from small independent refiner into a behemoth.
Chevron Raises Cost Estimates, Delays Two Projects
(Bloomberg) -- Chevron Corp., the second-largest U.S. oil company, raised its cost targets for seven projects by $3.8 billion and indefinitely delayed two others amid record prices for energy services and equipment.
Venezuela to tax oil firms for environmental damage
EDMONTON, Alberta (Reuters) - Venezuela plans to introduce a new tax on oil companies to help pay for environmental damage and to compensate the Venezuelan people, oil minister Rafael Ramirez said on Tuesday.Ramirez, speaking to reporters at a conference in Edmonton, added that OPEC-member Venezuela was sending to China crude oil that U.S. oil giant Exxon Mobil did not want for its Chalmette, Louisiana, refinery.
High oil prices hurt tourism, group says
CALGARY – High oil prices are squeezing business that rely on travellers for their livelihood, says the CEO of the Tourism Industry Association of Canada."It is a drag on tourism for sure," Randy Williams said in an interview Tuesday.
Gasoline: Painful, and getting worse
Experts say record pump prices are pushing energy spending to early 1980s levels, and that's helping pull the economy into recession.NEW YORK (CNNMoney.com) -- So gasoline prices are at an all-time high. But after adjusting for inflation, rising incomes and better fuel efficiency, how bad are they really?
The experts' answer: Bad. Nearly as bad as they've ever been, and not likely to get better anytime soon.
Gas prices rise to new national record
NEW YORK - The cost of filling up the family car jumped to a record high Tuesday, adding to the challenges consumers already face with falling home values and rising food prices.Gas prices at the pump rose overnight to a record national average of $3.2272 a gallon, according to AAA and the Oil Price Information Service. That's a tad higher than the previous record of $3.2265, set last May.
A year ago, rising demand and a string of refinery outages had raised concerns about supplies. Now, the soaring price of crude oil is the culprit, propelling gas higher even though supplies are at 15-year highs.
Russia oil exports 'hit $1bn per day'
Russian energy exports are close to reaching a milestone $1 billion per day value mark, bringing in more money for social spending and creating extra inflationary pressure, according to a report released today.
Total sees Saudi Jubail refinery start up in 2012
PARIS (Reuters) - Total and Saudi Aramco expect a new 400,000 barrels per day refinery in Saudi Arabia to start up in 2012 and a final decision will be made in mid-2008, a senior official of the French oil company said on Tuesday.The world's top oil exporter Saudi Arabia is planning four new plants as it looks to boost domestic refining capacity by as much as 1.6 million barrels per day from 2.098 million bpd.
But rising costs for equipment and labour have hit the energy sector worldwide, forcing project cancellations and delays and raising industry concern about the new Saudi plants.
Total, however, is confident that the final decision will be made in summer and operation of the Jubail refinery is expected in 2012, Jean-Jacques Mosconi, the senior vice president of the company's strategy and development, said at the European Fuels Conference organized by the World Refining Association.
Fuel imports flow to Nigeria amid recall row
But late last month, as traders were putting in offers for the latest round of potentially lucrative fuel deliveries to the West African oil exporter, the industry regulator linked a spate of engine damage to one cargo of imported gasoline....The Department of Petroleum Resources linked the damage to the 20 percent ethanol content of the fuel. Nigeria recommends its suppliers blend no more than 5 percent, its officials said.
Guess Who Hopes to Help Power New Hybrid Cars
Exxon Mobil Corp., the world's largest gasoline refiner, wants a piece of the hybrid-car market.After filling automobile gas tanks for decades, the company has started looking under the hood. It's betting that further development of a component it created for cellphone batteries can help improve a new type of battery that may eventually power most hybrid cars. If it's right, Exxon could play a part in ushering in a new generation of hybrid and electric cars, lessening the world's reliance on gasoline.
Michael J. Economides: Presidential Candidates Clueless on Energy
It is certain that the United States is in for an energy price and supply shock the likes of which we have never experienced or imagined. While high prices, to a reasonable extent can be tolerated, hell will break loose if massive supply disruptions emerge. We are much closer to them than people think. Those who think that we can conserve ourselves to energy independence need not read any further. They are vastly wrong and it is pointless to argue with them.
Sense and nonsense from Nansen Saleri
Assume you are an elected official from Connecticut, Minnesota, Virginia, or California, all states that have begun to wrestle with the implications of peak oil. Then last Monday you read Dr. Nansen Saleri’s op-ed, “The World Has Plenty of Oil,” in the prestigious Wall Street Journal. Should you accept his cornucopian view of our energy future, which holds that a peak in world oil production is many decades away?
Volatile Oil Prices Subject of Forum
The price of oil has escalated much more than expected. "It's caught most by surprise," says World Bank Senior Energy Economist Shane Streifel, a panelist at the forum's session on whether high and volatile prices are here to stay.That's happened even though oil stocks around the world are not "critically low," and oil output by the Organization of the Petroleum Exporting Countries (OPEC) has recently edged higher.
The whole system is daft, and not just from the point of view of global warming. Iran is blowing its oil profits on petrol subsidies, so that people end up spending hours a day in traffic jams. There are a few nods in the direction of public transport. On some of the wider boulevards, there is a fast lane in the centre for special high-speed buses, but there are clearly not enough buses. Each one is crammed to bursting.At this rate, Iran will burn through its oil wealth in a generation, ultimately justifying all the effort it is putting into nuclear development. The inverse of that argument is that if the country did not waste so much fuel, it would not have to worry so much about its future energy needs and their would be less urgency, and less tension, surrounding its nuclear programme.
Rise in oil prices set to impact all aspects of U.S. economy
That's right, ladies and gentlemen, the resource that single-handedly catapulted humanity into modernization is done for. Kaput. Disappearing fast and never to reappear again.That's the essential problem with oil: It's finite.
Pakistan: Welcome to the modern stone age
Half naked, half covered with leaves, barefooted, with shoulder-long hair and a spear in hand, hiding in a cave or on a tree, ready to ambush the prey--this is the scene that traditionally portrays the stone-age life. Fortunately, that time is gone, but the people of Pakistan are now having a new version of it, "modern stone-age," thanks to the energy crisis in the country.
Daily Record Prices for Oil, Gasoline Hammer Consumers and U.S. Economy
Congress and President Bush must take joint action against the speculators who have driven oil and gasoline prices past all-time records, said OilWatchdog.org, a project of the Foundation for Taxpayer and Consumer Rights. Gasoline prices nationally are expected today to surpass last year's record of $3.227, and California, at $3.571 per gallon as calculated by AAA, is more than 7 cents a gallon over last year's record."There is no shortage of gasoline, no shortage of crude oil, no underlying market reason for these excruciating record prices," said Judy Dugan, research director of OilWatchdog and the nonprofit, nonpartisan FTCR. "Speculators and hedge funds, today's Enron rogues, are driving an economic disaster by pouring billions into bets on continually rising prices."
Bolivia Starts Energy Revolution
La Paz (Prensa Latina) Bolivian President Evo Morales is presiding here on Monday a ceremony marking the start of the "energy revolution", which includes the distribution, free of charge, of five million energy-saving compact fluorescent lamps.
THE negative response from the Organization of Petroleum Exporting Countries to President Bush's request for increased production to help the United States meet the problem of rising gas prices follows from its member countries' overall judgment of Mr. Bush's foreign and domestic policies.
Slowdown turning the tide of shipping-industry profit
The glut of shipping capacity has forced down rates. But the shortage of crews and the rising oil price mean the cost of running ships is rising. And because inflation is pushing up the value of cargos, insurance costs are going up as well. Minor savings are possible, notably by reducing the speed of ships to save fuel, but customers are increasingly intolerant of delays.
Mexico Anticipates Petroleum Trade Deficit
The trade balance in Mexican petroleum products could stop being a surplus and turn into a deficit in the medium term.Last year Mexico recorded foreign currency revenue from exports of petroleum products totalling 42,885,844,000 dollars, and imports amounted to 25,704,844,000 dolalrs, so the surplus was 17.181 billion dolalrs.
Nevertheless, also taking into account foreign purchases of petrochemical products and natural gas made by private companies - not counted by Mexican Petroleum [Pemex] -imports totalled around 34 billion dolars, so the real surplus is under 7 billion dollars.
Chevron sees 2010 reserve growth, still below 2006
NEW YORK (Reuters) - Chevron Corp on Tuesday said it expects its oil and gas reserves to grow about 5 percent over the next three years, but the growth won't quite offset the 7 percent drop the second-largest U.S. oil company reported in 2007.The company said it expects its proved oil and gas reserves to be around 11.3 billion barrels of oil equivalent (boe) at the end of 2010, which is just slightly higher than what the company held before its 2005 purchase of Unocal.
Brazil's Tupi seen a bonanza for oil service companies
HOUSTON (Reuters) - Deep below the ocean floor off Brazil is Tupi, possibly the largest offshore oil field ever discovered.Brazil controls Tupi, but getting crude oil out will create billions in revenue for oilfield service companies like Halliburton Co and Transocean Inc that have the expertise needed to tap the extremely complex reservoir.
Citgo CEO: Venezuela to Keep Supplying Oil to W. Hemisphere
Despite recent conflicts between Venezuela's national oil company and oil giants operating in the country, a Venezuelan official stressed Monday that the country is open to foreign investment in its oil fields."Venezuela will continue to honor long-term crude agreements," said Alejandro Granado, chief executive of Citgo Petroleum Corp., Venezuela's U.S. refining arm.
Shell plans floating liquefied natural gas plant
The vessel would combine with technology for developing remote gas fields and reduce environmental concerns around the building of onshore gas plants. Shell said it would issue a tender within four months to Korean and Japanese shipyards and some engineering companies.The floating facility would have an annual production capacity of 3.5m tonnes, the Anglo-Dutch group said. Other companies such as Petronas of Malaysia have studied switching to floating facilities to tap growing demand for liquefied natural gas, particularly in Asia. The region buys about 60 per cent of world LNG production.
Nigeria oil rebel pipeline found
Nigeria's army says it has found a private pipeline that was used to supply oil to a militant leader's home.The underground pipeline ran from a major oil refinery to a hideout in Rivers State of Ateke Tom, the head of the Niger Delta Vigilantes.
The average tractor-trailer gets just 5 to 6 miles per gallon, and, at current prices, it can cost more than $700 to fill the empty tanks on most long-haul trucks. That's too much for many truckers to keep hauling goods.Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association in Grain Valley, Mo., estimates as much as 10 percent of the association's 161,293 members have parked their trucks.
Mass transit use hits 50-year high on pump prices
NEW YORK (Reuters) - The number of Americans hopping buses and grabbing subway straps has climbed to the highest level in half a century as soaring gasoline costs push more commuters to take mass transit.
Big Oil Profit Pushes Democrats to Seek $1.8 Billion
(Bloomberg) -- Record oil-company profits, gasoline prices over $3 a gallon and the threat of a U.S. recession are increasing Democrats' prospects for taxing oil and gas producers to pay for wind, solar and conservation programs.
How Many People Does It Take to Make a New Light Bulb?
A new scientific renaissance is exactly what the battle against climate change needs. As Kimberlin says: "We don't have an energy crisis; we have an imagination crisis." Solving global warming will require changes in the way we live and use energy, but even more vital are technological leaps in clean technology that must be every bit as revolutionary as Edison's incandescent bulb. Spencer Trask and the Rockefeller Foundation have inundated InnoCentive with an array of challenges in clean tech — including a call for a new kind of electricity-free light bulb that would make Edison's invention obsolete. "We want the kind of challenges that will make a difference in the world," says Spradlin.
Volunteers help warm New England homes
BANGOR, Maine - The low point in Kimberly Henderson's struggle to keep her family warm came in early January when she was too broke to order an oil delivery and had to buy a 5-gallon container to take to her dealer to get enough fuel to make it through the night.But later that month, with the gauge on her 275-gallon tank again approaching empty, Henderson's fortunes turned around when she got a phone call from a local clergyman: He just received a donation that would provide her with 50 gallons of heating fuel that day.
Beijing - China said on Tuesday its battle to rein in soaring greenhouse gas emissions has received a boost from an unexpected source - the nation's controversial family-planning policy.Since its adoption in the late 1970s, the so-called "one-child" policy has averted the births of more than 300 million people, who would have emitted an additional 1,3 billion tons of carbon dioxide per year, a government environment report said.
The news media and the government are fixated on the fact that the U.S. economy may be headed into a recession -- defined as two or more successive quarters of declining gross domestic product. The situation is actually much worse. By some measures of economic performance, the United States has been in a recession since 1975 -- a recession in quality of life, or well-being.
Progress seeks Florida OK to build new reactors
NEW YORK (Reuters) - Progress Energy Inc's Progress Energy Florida subsidiary Tuesday asked the Florida Public Service Commission to approve of the need for its proposed $14 billion Levy County, Florida nuclear power plant.The company estimated it would cost about $14 billion to build the two reactors and another $3 billion for the necessary transmission upgrades.
Data centers are an increasingly significant source of energy consumption. A recent EPA report to Congress estimated that U.S. servers and data centers used about 61 billion kilowatt-hours of electricity in 2006, or 1.5 percent of the total electricity used in the country that year. Concern about the amount of energy eaten up by data centers has led to a slew of research in the area, including new work from Microsoft Research's Networked Embedded Computing group, which was showcased last week in Redmond, WA, at Microsoft's TechFest 2008. The work attacks the energy-consumption problem in two ways: new algorithms make it possible to free up servers and put them into sleep mode, and sensors identify which servers would be best to shut down based on the environmental conditions in different parts of the server room. By eliminating hot spots and minimizing the number of active servers, Microsoft researchers say that the system could produce as much as 30 percent in energy savings in data centers.
Australia: WA warning over meat shortage
In a joint written submission to the ACCC due later today, WAFarmers and the Pastoralists and Graziers Association will argue returns to beef and sheep producers have failed to keep pace with rapidly rising costs of grain, fuel and labour. “In the past 12 months, prices have reached near record low levels for beef,” PGA spokesman Tim D’Arcy said. “At those prices, it is not viable for cow-calf operators to continue.”
According to government statistics grain production in the country has gone up by 5 percent in the last five years. That would have been more reassuring if population growth in the same period had also been 5 percent or less; but it was 8 percent. The green revolution of the 1960s has been in urgent need of being followed by a newer version.
Grass is greener when it’s used for biofuels
In Middle Musquodoboit, Jim Higgins and a small group of local residents recently formed Grass Roots Bioenergy Co-operative.Over the past several years, they’ve been quietly working on a plan to use idle land to grow unusual species of field crops like switchgrass and reed canary grass to be used to produce biofuels.
Growing about two metres high at maturity, these grasses appear well-suited to prosper in Nova Scotia. Harvested annually, they can be dried and processed into solid fuel pellets, providing heat or electrical energy at competitive costs to most other energy sources.
Beef industry reeling from rising feed costs
There are some public misconceptions about the influence of corn ethanol on the cattle industry, namely that once that corn has been processed for ethanol it can be delivered to feedlots, thereby reducing risks of a corn shortage. But corn comes out of the ethanol process resembling confetti and is very hard to ship, beef producers said. In some areas of the country, feedlots have managed to avoid shipping problems by locating across the street from ethanol refineries, but that's not an option for many.Weschenfelder said post-refinery corn is too high in sulfates and phosphates to be fed to cattle in high portions and can actually kill a cow.
Corn-Based Ethanol Could Worsen "Dead Zone" - Study
WASHINGTON - Growing more corn to meet the projected US demand for ethanol could worsen an expanding "dead zone" in the Gulf of Mexico that is bad for crawfish, shrimp and local fisheries, researchers reported on Monday.
A conservative yield estimate of three tonnes of wheat per organically-cultivated hectare is reasonable, Whitley suggests. Assuming you're going for an extremely wholewheat approach - using the whole grain, including bran and germ - each tonne of flour pretty much equates to a tonne of wheat (in British commercial milling 4.5 million tonnes of flour is made from 5.5 million tonnes of wheat every year), then you need 297 square metres of wheat to provide your family with bread.And there's the rub. According to Garden Organic, the organic growing charity, the average British garden size as of 2006 was about 90 square metres.
Furthermore, Whitley strongly advises you only use a quarter of your garden at any one time to produce wheat. A "monoculture" of wheat year in year out would exhaust the soil and allow the spread of disease.
Pollution is called a byproduct of a 'clean' fuel
MOUNDVILLE, Alabama: After residents of the Riverbend Farms subdivision noticed that an oily, fetid substance had begun fouling the Black Warrior River, which runs through their backyards, Mark Storey, a retired petroleum plant worker, hopped into his boat to follow it upstream to its source.It turned out to be an old chemical factory that had been converted into Alabama's first biodiesel plant, a refinery that intended to turn soybean oil into earth-friendly fuel.
It was only a few months ago when $100 a barrel for oil seemed to be a height just beyond the market's grasp. Now, get ready for $110, $120, or, just possibly, according to analysts at Goldman Sachs, $200 a barrel oil.
Frenzy in the oil-futures market leaves motorists in the lurch
Prices are heading to $120 "in the short term," said Matthew Simmons, chairman of Simmons & Co., a Houston investment bank."I'm one of the few people who's not surprised to see crude at $107. I still think it's a bargain."
Petroleum engineer to discuss peak production
While it took decades for oil production to reach current levels, the decline in production will likely be swifter, he predicted, noting the decline is not symmetrical with the increase."It tends to decline faster than it increases," he said of production. "There is a certain amount out there. And we use it a whole lot faster than it's being produced by Mother Nature. We also tend to go to the low-hanging fruit first."
The end of the world as we know it
Unfortunately, the tradition of Malthusian warnings is ingrained in our society without a corresponding memory of their tendency to overstate risk. All the catastrophes predicted were prevented, and we're still here. Yet we continue to issue warnings of our own demise. Again and again, we get into situations we can't possibly imagine a way out of. But then we discover solutions beyond anything we could ever have imagined.I can't imagine how we'll solve global warming. But I'm confident we will. Progress is the modus operandi of the human race. As we move forward, we're bound to encounter new threats to our way of life. Global warming itself is a descendant of Industrial Revolution-era pollution. Antibiotics have saved millions of lives, but we're facing fatal antibiotic-resistant infections as a result. Fertilizers and pesticides that prevent starvation also imbalance ocean ecosystems and poison drinking water. But human progress is indefatigable. Every time the world as we know it threatens to end, we move on to a new, better world.
Michigan conference on peak oil and climate starts May 30
The first “International Conference on Peak Oil and Climate Change: Paths to Sustainability” will feature:● Richard Heinberg author of “The Party's Over: Oil, War And The Fate Of Industrial Societies” and “PowerDown: Options And Actions For A Post-Carbon World”;
● Dr. David L. Goodstein author of "Out of Gas: The End of the Age of Oil", Frank J.Gilloon Distinguished teaching and Service Professor of Physics at the California Institute of Technology;
● Megan Quinn Bachman co-writer & co-producer of the documentary film, "The Power of Community: How Cuba Survived Peak Oil";
● Julian Darley author of “High Noon for Natural Gas”, Founder and President of the Relocalization Network and Post Carbon Institute;
● Stephanie Mills author of “Epicurean Simplicity, In Service of the Wild: Restoring and Reinhabiting Damaged Land”, and “Whatever Happened to Ecology?”;
● Pat Murphy author of "Plan C: Community Survival Strategies for Peak Oil and Climate Change" and Executive Director of "The Community Solution".
Internationally renowned authors Heinberg and Darley appear live via interactive videoconference from California. U.S. Representative Vernon Ehlers (R-MI) of the Congressional Peak Oil Caucus introduces the concept via pre-recorded video.
UK: Government to approve new coal power station
Jim Hansen's, Nasa's climate change scientist, said: "If the British Government indeed approves new coal-fired power plants before carbon-capture technology is ready, and if it believes that this egregious action is in any way compensated by restrictions on gas-guzzling vehicles, it is demonstrating a grievous lack of understanding of the gravity and urgency of dealing with climate change."It is not rocket science. The oil that Russia and Saudi Arabia have will be burned and the carbon dioxide will stay in the air for centuries. By delaying oil use a bit, with more efficient vehicles, we can buy a little time to develop a transportation system beyond fossil fuels, but that is all.
"Oil will take us to the brink of climate disasters, which can only be avoided with a moratorium and phase-out of coal that does not capture the carbon."
Oil tops $109 a barrel for first time
VIENNA, Austria - Oil prices topped $109 a barrel for the first time Tuesday as investors sought refuge from the anemic dollar.Speculation that rising prices for oil and other commodities will offset the falling dollar has driven oil up from $87 a barrel in January. Oil's latest rise came as the International Energy Agency said crude prices will likely be underpinned by brisk demand in China and other emerging markets.
Light sweet crude for April delivery on the New York Mercantile Exchange surged to $109.20 a barrel in electronic trading before slipping back to $108.84 by early afternoon in European trading.
But even that later level was 61 cents higher than the previous intraday peak set Monday, reflecting oil's seemingly inexorable march toward the psychologically significant $110 a barrel mark.
Kunstler: Cheap Oil Is Over: Kiss the Gas Guzzling NASCAR Era Goodbye
A suburban nation of snowmobilers, dirtbikers and NASCAR races -- all of it was made possible by the one-time blessing of cheap oil.
Record fuel prices blow budgets
Separate from the role energy prices play in the risk-and-reward scenario for speculating investors, the result for Americans' lives is that energy, and the mobility that it brings, is becoming crushingly expensive.High oil "makes us poorer than we would otherwise be," says St. Louis Federal Reserve President William Poole. "There's a hit to real income. It's a drain on your purchasing power."
How this shows up in everyday life...
IEA: no likely relief from oil prices
The International Energy Agency warned Tuesday that there is unlikely to be much relief from current high oil prices because of brisk demand in China and other emerging markets.While record prices above $100 per barrel may chip away at oil consumption in the United States and other developed countries, emerging markets are not slackening, the Paris-based agency said in its monthly report.
THE relentless rise in oil prices, perpetuated in large part by insatiable global demand, underlies a crucial principle: that the dream of energy independence is a delusion.The potent mixture of robust demand, limited spare capacity and multiple threats to supply that are now driving the market is the precursor to a world supply-demand imbalance.
Venezuela's oil belt reopens to private groups
Less than a year since president Hugo Chávez seized control of the vast oil fields in Venezuela's Orinoco belt, executives from international energy companies are back, armed with smiles, pens and cordial handshakes.US oil groups ExxonMobil and ConocoPhillips spurned the compensation offered by Caracas, preferring to fight it out in the courts - Exxon is awaiting a ruling in London this week. But France's Total, Norway's Statoil-Hydro and Italy's Eni have signed potentially significant new deals.
Trade deficit grows in January as imports, crude-oil prices hit record highs
WASHINGTON: The United States' trade deficit grew larger in January as imports — including crude-oil prices — zoomed to all-time highs.
CALGARY -- In response to concerns that new U.S. environmental legislation will drastically impact development of Canada's oilsands, Washington is considering classifying oil produced from the region as "conventional" fuel rather than subject it to the stringent standards expected of "alternative" fuels.
Liberals, NDP decry Tories' oilsands plan
EDMONTON - Alberta's Energy Minister -- and some oil industry leaders -- took a conciliatory tone to new federal rules affecting oilsands developments and coal-fired power plants yesterday, at the same time they were denounced by opposition parties.The restrictions will require new oilsands plants to install carbon-capture and storage systems by 2012, and restrict construction of coal-fired plants using dirty coal.
New technology has high costs and legal pitfalls
OTTAWA — The federal government has made a leap of faith that Canada's oil industry and coal-fired utilities can quickly incorporate carbon capture and storage technology that remains largely untested and is fraught with legal uncertainties.
D1 Oils chief leaves with broadside
Karl Watkin, the founder of biofuels pioneer, D1 Oils, today announced his departure from the company with a verbal broadside against governments, campaign groups and even the London Stock Exchange.All had played their part, he claimed, in unfairly damaging the financial value and progress of a firm which had been feted by Bill Clinton and other world leaders for its success with turning the Jatropha plant into a sustainable transport fuel.
China May Ease Price Controls on Vegetable Oil, Minister Says
(Bloomberg) -- China, which imposed price curbs on food to fight inflation, may ease controls on retail vegetable oil prices after supplies to consumers dropped, a minister said.
In the growing firestorm of criticisms about ethanol and other biofuels, the facts are being badly burned. Opponents decry policy incentives to encourage the industry's growth and make specious claims that American biofuels are driving up food prices and perhaps even encouraging the destruction of forests in other parts of the world. But no one is stopping to ask if any of it is true.
Rising Food Prices? Let Them Eat Biofuel
Who would have believed that in this day and age people would be rioting over food prices?With rice, wheat, maize and feedstock up between 30 and 50 percent this year, ordinary people around the world are struggling to afford a simple life-sustaining diet. Indeed, since 2005, the prices of essential commodities have risen by an average of 75 percent.
People in Egypt would be in dire straits if it wasn’t for the government’s quick action to broaden food subsidies, no doubt with memories of the bloody 1977 bread riots in mind that threatened to bring down the government.
Britons form clubs to cut carbon, pay for overuse
London - It's the time of year when many Britons might be thinking of hopping on a plane to get some sun. But Andy Ross won't be joining them.It's not that Mr. Ross is scared of flying. Instead, he is trying to make the world a cooler place. By cutting out leisure flights and adopting a host of other measures, he has reduced his own carbon emissions by more than 80 percent in two years.
Minority groups most at threat from climate change
LONDON (AFP) - Ethnic minorities and indigenous groups will suffer disproportionately from the effects of climate change, according to a report published Tuesday.The study by Minority Rights Group International (MRG), which analysed several recent environmental disasters, found that even though minorities and indigenous peoples were hardest hit, they were often the last to receive help and relief.
Food, energy costs risk UN poverty goals
UNITED NATIONS - Pricey food, high oil costs and grim projections of damage from global warming are the biggest challenges to meeting the United Nations' 2015 deadline for reducing poverty around the globe, officials said Monday.
Seal cubs threatened by global warming, WWF warns
HAMBURG, Germany (AFP) - Hundreds of newborn seal cubs risk dying of hunger and cold because global warming is making ice in the Arctic Circle melt too fast, the World Wide Fund for Nature in Germany warned Monday."In some parts perhaps not a single one of the seal cubs born in the past few weeks will survive," the WWF said in a statement.
Queen urges action, not talk, to tackle climate change
LONDON (AFP) - Queen Elizabeth II made rare comments on the environment as she issued her Commonwealth Day message Monday, calling for more action to meet rhetoric on tackling climate change.
California's greenhouse-gas law: Who will pay?
Oakland, Calif. - Somebody, somewhere will have to pay for California's landmark law that would force dramatic cuts in greenhouse-gas emissions by 2020. Two years on, it's not much clearer who.
I know this has probably been explained here before, but I haven't seen it. Could someone explain why gas prices do not seem to be following oil prices up? I would have tought that oil at $109 would have moved gas prices to $4 or more, but they seem to be staying in place. Why the disconnect? Thanks.
The $109 price is not of crude oil in the refinery today, but of "futures". They're not spending $109 and getting a barrel of oil, but are buying the right to get a barrel of oil (say) in March 2009.
What people expect to pay a year or more from now does not necessarily affect the price of what's in the refineries and service station pumps today. It's a bit the way if you're paying rent, that mortgage rates or house prices go up doesn't always affect you - in paying rent, you're paying whatever the owner paid for it however many years ago, you're not paying whatever it's worth today. Likewise, when you pay for fuel at the pump you're paying for their costs in the last few weeks or months, not their costs today or a year from now.
If that 68% portion goes up, well the refining 8% is a fixed cost, as is the 13% taxes. So all the oil companies can change is the 11% distribution and marketing.
They have to choose whether to pass the cost onto the consumer, or just make a smaller profit. If they pass the whole cost on, customers might decide to just... buy less! Hell, the customers might even demand the government bring the streetcars back! And then where would the oil companies be, eh? :D
But we're talking about April 2008 delivery price here not 2009.
Naw, the NYMEX price is the spot price in Cushing, Oklahoma right now, or within a few pennies of it.
http://www.bloomberg.com/markets/commodities/energyprices.html
The major retailers follow the RBOB price on the NYMEX pretty closely. If the NYMEX price goes up today, you will see them out tomorrow morning, or sooner, changing their prices. But they are a bit slower to respond when the price falls. They say they must recover their cost. Of course they are making a windfall profit when they mark up the price immediately, regardless of what they bought their last load for. However deliveries to large retailers are made every couple of days so there is never much of a delay.
Ron Patterson
And once again, shawnott's (and others) are left unanswered.
The price of gasoline should be nearing $5 now.
It was made obvious last week as RBOB went to $2.72 and fell back to $2.51.
Even as crude has gone to $109, RBOB is $2.73,
dropping to 2.68 with crude at 107(up $4 over RBOB's
$2.73 price).
And this has been going on since crude topped $80.
Gasoline is still neck and neck with Katrina prices
of Sep 05.
Command Economy. Watch the Indies like Valero, Tesoro,
Sunoco. If I owned them, I would be putting just enough
thru to lubricate the machinery.
Something's got to give.
RBOB gasoline opened last week at $2.69, fell back on Tuesday when crude fell below $100 then closed on Friday at $2.69 exactly where it opened.
As Robert points out below RBOB does not follow oil exactly and there is no reason to believe it should. The difference is called “The Crack Spread”. [This has nothing to do with Eliot Spitzer. ;-) ] You can actually trade futures and options on the crack spread. It is precisely because the crack spread varies from time to time that futures and options are traded on it.
Bottom line, absolutely nothing unusual is happening.
http://www.nymex.com/crack_spread_overvi.aspx
Ron Patterson
We're looking at two different RBOB's.
http://futures.tradingcharts.com/intraday/RB/48
Mar 4 $2.62 to 2.52.
Mar 5 $2.52 to 2.68.
Mar 6 $2.65 to 2.61.
Mar 7 $2.70 to 2.67.
Mar 10$2.67 to 2.69.
Crude same time period.
$99 to 108.
http://futures.tradingcharts.com/intraday/CO/48
RBOB goes up $.17.
Should've gone up at least $.24. And RBOB always tracks Crude down.
And it's been doing this for at least a year.
That is the 30 minute chart is is basically useless as far as daily opening and closings are concerned. Go one step back to here:
http://futures.tradingcharts.com/chart/RB/48
Then click on each bar to get the opening and closing for each day. This gives you a much clearer picture and it is the exact same source as yours, except much clearer when you you look at the daily chart rather than the 30 minute chart.
Ron Patterson
Ron,
I thought that you would be interested in this missive from one of my Wall Street correspondents. No link yet. Note that the IEA considers a -7.7%/year decline rate in existing fields to be optimistic. At -7.7%/year, existing Non-Opec fields decline by 50% in about nine years. At -11%/year, they decline by 50% in about seven years.
Bloomberg: Oilfield Decline in Non-OPEC Producers `Exaggerated,' IEA Says
2008-03-11 05:09 (New York)
Thank you for this info. Very helpful.
''extended North Sea field shut ins''....
What extended North Sea field shut ins?
Just the usual summer maintenance shut downs.
Or maybe they think that the 1999 UK all time peak is just an anomaly.
Thanks Jeff. 7.7 percent is a far cry from the 4.5 percent that CERA came up with.
Ron Patterson
But it's pretty damned close to the 8% posited by the CEO of Schlumberger a few years ago.
Just to let you know this fits pretty well with my sharp drop off model.
Sounds like the oil industry may be having serious decline problems that are not being talked about.
Same I really suspect with production.
In any case with my model things change fast enough that the collated data from the government can't keep up with the situation. Absolute worst case is a 1mbpd drop in production every 4 months.
My absolute worst case is roughly 2x yours, memmel.
2x ? you must be factoring in war to get that I'd think.
The only way I could get steeper is to assume war in Mexico, Venezuela, ME etc.
Its not a bad assumption but impossible to figure.
Also note this did not include Export Land so that would boost it a bit more on the export side.
On this flip side this is assuming basically no large projects come online.
If you get a few of those it would probably make up a good bit of Export Land but not both steep declines and export land.
Assuming war takes out a constant 2-4 mbpd per year plus look at export land for exports only. And really push it you might get 2x.
Obviously a gulf war could take out more but I don't think that including that makes sense for a prediction its outside the scope.
Anyway I'd like to see you assumptions to get 2x mine. Lets see if my guess of above ground factors is right.
Creepy ! Any other facts to corroborate this ?
Read
http://hubbert.mines.edu/news/Ivanhoe_96-1.pdf
Christ, that was a great forcast. They nailed the 300bbo that al Husseini laid out last October... from 13 - 14 years ago.
Damn!
Cheers
That's very interesting!
EIA's March short term report was just released.
http://www.eia.doe.gov/emeu/steo/pub/contents.html
It said that "0.7 mbd of non-OPEC supply growth is projected in 2008, revised down by 0.2 mbd from the last Outlook. This change represents a revision to expected project schedules as well as a re-evaluation of decline rates at existing fields." Assuming that 0.5 mbd of this 0.7 mbd is biofuels growth, this gives 0.2 mbd growth in crude and NGLs. Undoubtedly further project delays will round this number down to 0 mbd growth.
Gross peak oil additions from wiki oil megaprojects 2008 is 4.1 mbd for crude/NGL.
http://en.wikipedia.org/wiki/Oil_Megaprojects/2008
However, only about 3 mbd of new production should occur since the 4.1 mbd refers to peak which can be delayed by several years.
Non-OPEC-13 crude/NGL production for 2007 was about 46 mbd. The adjusted EIA forecast non OPEC 13 growth of 0 mbd implies that the "EIA adjusted" non OPEC decline rate is 6.5% (3 mbd/46 mbd).
If the IEA's decline rate of 7.7% is used then non-OPEC-13 2008 crude/NGL estimate is 45.5 mbd, a drop of 0.5 mbd from 46 mbd in 2007. My latest forecast, updated for the recent EIA actual data, also predicts that non-OPEC-13 2008 crude/NGL is 45.5 mbd.
This is kinda interesting.
Since my worse case scenarios imply decline rates of 7-12%.
10% of 45.5 = 4.54 mpd
So if OPEC holds stead and Non Opec decline rate is closer to 10-12% then
we end up down. If Opec is actually 7% then for sure down.
So ending 2008 down 4mbd is not impossible.
My best guess ( gut feeeling ) is 2mbpd down by the end of 2008.
These propaganda bulletins by the IEA underscore its uselessness for the task it was designed for. Production in Russia has not stalled/dropped because of asset divestments. What drivel.
The mean age of oil fields is increasing simply because new discoveries are too small and too few. Oil field decline rates do not shrink or stay constant with age, they increase. So by mathematics, the mean decline rate in exiting world production centers is increasing. New production comes on stream intermittently so in some years the underlying decline becomes more apparent. The IEA is spewing nonsense just like CERA.
At some point, the oil companies may "bring the streetcars back" -- just as they destroyed them at the beginning of this sorry mess. At some point, they will run the "streetcar lobby", just as they run the highway lobby of today. I look for this transition quite soon, in fact.
The streetcars were destroyed when the people in Santa Monica and elsewhere started buying cars and stopped riding the streetcars. I once rode the streetcar (interurban) from Dallas to Waco during its last year. It was miserable compared to the bus. Of course it is fun to blame the oil companies for everything.
Conspiracy??
http://1134.org/stan/ul/GM-et-al.html
Of course, there are numerous stories about how this happened. In the short term, cars won, and the winners write the history.
In the long term, automobiles will prove to be an evolutionary dead end. The final word is not in. Probably not a conspiracy -- just mass delusion and stupidity. And cupidity.
opinions vary on this point, Robert, but it is what it is. Extreme and coordinated tactics where documented and proven:
http://en.wikipedia.org/wiki/General_Motors_streetcar_conspiracy
contributing causes did exist of course:
http://www.lovearth.net/gmdeliberatelydestroyed.htm
Even though the refiners are using oil they bought at yesterdays price, they know they will pay more for the next batch. If I owned a million gallons of gasoline, I wouldn't sell it based upon my sunk cost, but at what the market will bare. If I bought oil last month, and its price has gone up/down, that is a gain/loss on the commodity, the gain/loss on refining it is an independent manner. During the last several months supply/demand for gasoline has made it very difficult for refiners to make a profit. I think this is an effect of high (and increasing) oil prices. Demand is reduced, but the nations refining capacity remains the same.
In January of 2007 RBOB gasoline on the NYMEX hit $1.40 a gallon. Today it just hit $2.71. I think gasoline has been following crude oil.
http://futures.tradingcharts.com/chart/RB/W
Notice the huge move up last spring of over $1.00 per gallon. Retail gasoline prices usually average about half a buck higher than RBOB gasoline on the NYMEX. Perhaps it was a little higher than that last January. In other words it was slightly overpriced then and is now more fairly priced.
Ron Patterson
And I know it hasn't.
Chart it for us.
One yoy, from Mar 07 to today.
I agree, there has been a disconnect and I think it will be rectified this summer. You can plot Crude on Retail Gasoline at Gas Buddy website. I am guessing $.50 of retail gas for every $10 of crude so at $110 we will have $5.50 this summer.
plot some prices
Your "guess" is at odds with Kiashu's graphic above, which would suggest that about $2 out of a $3 price for gasoline is for the crude. Assuming that the crude delivered to produce gasoline sold in Jan 2008 cost $80/barrel(*) that would mean that every $10 in the crude price adds roughly $0.25 to the retail gasoline price, give or take. So (after adding back the $1 that goes to things other than crude) at $110 oil we might end up with roughly $3.75 at the pump sometime in the coming months. National US average, of course; in my neighborhood, that would mean $4.25 at the cheap station.
(*) $80 a barrel seems a decent enough rounded off average for the few months preceding Jan 2008. Note that if my guess is too low, then gasoline prices will increase less because of oil price increases. If my guess is too high, then gasoline prices should rise more.
are we neglecting the fact that the price a refiner pays is adjusted for oil gravity and sulphur content ? that NYMEX posted price is for wti. (edited)
Could someone explain why gas prices do not seem to be following oil prices up? I would have tought that oil at $109 would have moved gas prices to $4 or more, but they seem to be staying in place. Why the disconnect?
Gasoline inventories are at record high levels in the U.S. That has made it more difficult to pass on price increases. When inventories are where they are, and you try to pass on a price increase, a lower cost competitor may steal your customers.
Last year, we had the opposite situation. Falling inventories mean rising prices. Nobody could steal customers, because nobody had any excess product.
However, it is getting painful enough that prices are increasing now. The national average gasoline price has gone up now for 3 weeks in a row.
The only reason gasoline stocks are at record is
ethanol.
Here's the two Weekly price charts courtesy
TFC:
http://futures.tradingcharts.com/chart/RB/W
http://futures.tradingcharts.com/chart/CO/W
The key numbers:
Crude $75 down to $55, then up to $108 today.
RBOB $2.40 to 1.40 then up to $2.70 today.
All of this starting the second week in June 07 with that
huge "gasoline" increase.
Now we know today that 420 000 bbl of ethanol have been "added" every day since then.
Mcgowanmc, do you have any links to reliable sources who say that ethanol is included in the EIA's gasoline inventory figures?
I've been hearing this as the explanation for the high price of gasoline in the face of high inventory, and I've been hearing it from knowledgeable people. It would make sense. But no one can give me a good primary source.
US Petroleum Supply, Ethanol, and State of the Industry - API ...
According to API, “The figures cited here include gasoline that contains growing amounts of blended ethanol, amounting to well over 400000 barrels per day ...
www.eclipsenow.org/archives/561
"6. Ethanol
According to API, “The figures cited here include gasoline that contains growing amounts of blended ethanol, amounting to well over 400,000 barrels per day in 2007. If ethanol is excluded from the calculations, total domestic oil deliveries for the year would actually have shown a half percent decline.”
Analysis Based on EIA data, I would estimate US ethanol production would amount to 420,000 barrels per day in 2007, which is consistent with API indications. Last year’s US ethanol production amounted to 319,000 barrels per day, based on EIA data, so the difference is about 100,000 barrels a day. The 100,000 barrels per day increase during 2007 is about 0.5% of total petroleum products supplied of 20.7 million barrels a day."
Thank you very much, mcgowanmc. This is extremely helpful.
Straight from API:
http://www.api.org/Newsroom/record-high-us-fuel.cfm
"The demand data includes an increase in the amount of ethanol blended into gasoline, which averaged more than 400,000 barrels per day. Excluding ethanol, which accounted for nearly five percent of all gasoline sales during the year, total domestic oil deliveries in 2007 actually fell half a percent. An estimated 6.7 billon gallons of fuel ethanol were used by refiners in 2007, some two billion gallons more than the 4.7 billion gallons required by law but more than two billion gallons less than the recently-passed requirement for 2008."
The only reason gasoline stocks are at record is ethanol.
I guess I am not following that logic. As late as December, gasoline stocks were very low. They took off in December on the back of very strong gasoline imports - attracted by very high gasoline prices. The ethanol you cite is ethanol that went into the gasoline pool, not necessarily ethanol that went into inventories.
Wouldn't ethanol be included in blending components? (That is what I'm hearing from other analysts.)
It is, and it is the reason that the blending component portion of inventories has increased. But the reason for the record high inventories has nothing to do with ethanol. Look at the gasoline inventory chart (hover over the blue gasoline link under "stocks", bottom-left) at:
http://tonto.eia.doe.gov/oog/info/twip/twip.asp
Inventories have been on an almost vertical climb since mid-December. That's not ethanol; that's imports.
It's baffling.
I did notice that gasoline imports seem to be falling off in recent weeks. http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html#production
Thanks to all the answers. I guess my confusion has been in my thinking: Katrina = $80 oil = $3 gas. Now $109 oil still equals $3 gas (roughly).
So if it is all about inventories... doesn't the cost to produce those inventories increase? I guess I am thinking of it as a pipeline... we take oil out of the ground and produce gasoline, even if it goes to inventories. If the price of that oil goes up, so should the end product. Sorry, I still have a lot to learn.
If the price of that oil goes up, so should the end product.
This is why refining margins have evaporated. They were around $40/bbl last year. Right now they are $5/bbl (last time I checked).
Thanks. That makes a lot more sense now.
I see the shrinking crack spread more disturbing than price. How small can it get before small refiners stop refining and true shortages arrive? The Chinese commies can outbid us for crude and absorb a negative crack spread through say duties on exports or the sale of bonds. The big oil companies can ride out a negative crack spread on the back of their recent profits. Parts of the country at the end of the delivery chain and unable to buy enough fuel to make that last mile worth it may suffer the fate of Dakota farmers last fall. Crops may not get planted soon enough and today's $5.50 corn price may look like a bargain next fall.
How small can it get before small refiners stop refining and true shortages arrive?
They are cutting back now. The least efficient producers will cut back the most, and some will go out of business if margins continue to remain low. That's the nature of the refining business. Perhaps we need a windfall profits tax that gives money back to refiners when the windfall disappears. :-)
Refining margins do occasionally turn negative. However, I don't think refineries can exit the market in a way that would create shortages. The least efficient producers will exit the market if demand falls below the point at which they are able to sell. However, if there were anything like shortages caused by refinery shutdowns, the margins would increase again and thiose that shut down would resume production.
But but KSA claimed the problem was a refining capacity issue ?
I'd have no problem believing them if I didn't have to swallow a whole new belief every six months. I wish they would just blame it on the horoscope for the week so at least the story is consistent.
that's why valero is slagging off 40% of their US refining
Partly because they are now selling winter blend gasoline. Many refineries in the world can ship winter blend gasoline to the US. Further, we are now in the time of year when winter blend is in the process of being flushed out of the system (no longer legal in the spring). Summer blend gasoline is more difficult to produce and more difficult for foreign refiners to make and ship into the US. Therefore, much lower margins on winter blend, especially at the end of the season - to be followed shortly by much higher margins on summer blend. You know, the supply/demand thing.
True.
I've also think that the Goldman re-weighting of the GSCI in August 2006 may continue to be a factor.
http://www.ft.com/cms/s/2/a378d634-b54b-11db-a5a5-0000779e2340.html
Goldman's reweighting forced funds to sell 73% of their gasoline futures to conform to the new index. http://www.gata.org/node/4404
Gasoline still has only roughly 60% of the weighting now that it had in 2006. (4.88% now: http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices... 7.98% in 2006: http://en.wikipedia.org/wiki/Goldman_Sachs_Commodity_Index)
The reweighting appears to have caused a permanent distortion in the price of gasoline relative to the price of oil. I don't think it would be too tin-foil-hat to say that a political decision was made to sacrifice refineries to make gasoline cheaper for consumers for as long as possible.
$109 today, three Yergins ($114) by the end of the month?
You are right about a disconnect. Local taxes are 64 cent/gallon, NYMEX is at $2.72 and I can buy retail gas anywhere for $3.29, a few stations in the 'burbs 10 or even 20 cents less. Guess the distribution costs are negative.
Deflation to Hyperinflation in Practically No Time at All, Part Two
Interesting action by the Fed and ECB.
As several people have discussed, the urge to hyperinflate, at some point, is going to be irresistible.
BTW, as we have discussed, as oil prices go up, in Export Land the cash flow from net oil export sales goes up (at least initially), even if an exporting country is exporting less oil.
But consider another factor in Import Land.
What energy price would cause Bill Gates to curtail his energy consumption and what energy price would cause a poor consumer in Africa to curtail his energy consumption? In other words, as forced energy conservation moves up the food chain, the bidders for declining net oil exports are stronger. So, as forced energy conservation moves up the food chain, doesn't the price have to go up faster in order to force richer consumers out of the market? And as this happens, we see a positive feedback loop in most exporting countries, causing their rate of increase in consumption, in most cases, to increase, e.g., Russia is on track to become the #1 new car market in Europe.
I have been wondering about the talk of the effect of the declining US dollar on the price of crude.
For my own enjoyment I looked at the price of WTI over the past year and the relative price in USD, $CDN and Euros.
The price of crude in USD is from the EIA data.
The exchange rates were read from the graphs of the past year on the BBC business currency site and so are not exact but very close.
http://f1.grp.yahoofs.com/v1/QHTWRzG__5TAdKYc0HrTjQ4T1SaQQS9DvGkFI90Zr3P...
I doubt I am looking at it very scientifically, but it appears to me that relative to the price in Euros at least, about one third of the past year's price increase could be attributed to the USD falling. The rest is due to other factors from speculation to perhaps a growing respect for the fundamentals.
As far as Canada is concerned it seems we have actually reached the point where we are taking in about the same number of dollars from US exports as we are paying out for east coast crude internationally.
Again I may be reading this wrong but it looks like we were actually net losers in the crude business until last October.
Overall the price rises would seem to have had less impact in the Euro Zone as in the USA with us Canadians finally getting on the plus side ourselves. Could someone point out a better way to look at this?
With the dollar looking for a 9.6 from the Russian judge today the ratios might change even more.
Since all currencies float, or are linked to currencies that float, there really is no absolute price. Oil doesn't look so bad when calculated in Euro, RMB, or in Canadian, Australian, or New Zealand currencies. However, those currencies (among others) have been artificially driven up by the carry trade, or are being strengthened internally to combat inflation.
My gut feeling is that your 1/3 is in the ballpark of how much of oil's rise to attribute to USD decline. It could be a bit higher, but I think tight supplies caused by Asian demand coupled with a risk premium account for more. I think we're also starting to see some actual ELM-induced supply crunch in the price. I think we've seen some demand destruction in some of the poorer countries, which has tended to dampen its effect on price. That could change soon, however.
Hi jografy,
Try plotting it against gold which unlike currencies cannot just be printed to order. Sorry I don't have the figures or time to work it out. Today with gold at say $1,000 and oil at $110 it's nine barrels per ounce of gold. Back in 1971(?) when the US came off the gold standard gold was around $35 and oil $2 so 17.5 barrels per ounce. Either gold is expensive or oil cheap, my money is on oil being cheap.
FWIW, in the UK petrol (gas) is around GBP 1.10 per litre which works out at
1.10 x 3.79 x 2.00 = USD $8.34 a US gallon.
Actually gold can be "printed to order," after a fashion. Just like any other resource, there are economic gold reserves and non-economic, but the boundary between them is not hard, it's flexible depending on the currency rate so the influx rate of gold (how fast it's being mined) greatly depends on the price of mining it, which includes oil, inflation and everything else, and how badly you want to mine it. So as the gold price goes up, there is an increase in the number of available reserves. So I wouldn't say there's anything magical about gold. It's no different from any other precious metal, only more rare than some and less rare than others (e.g. Rhenium is $10.5k per oz. right now).
Right now the price of gold is at a historic high and still the supply is growing at only 1% per annum. It is true that as the price goes higher it becomes economical to mine lower quality deposits, but it takes ever increasing amounts of energy, risk and effort to do so. Ultimately the supply of gold is constrained by energy, infrastructure and availability of ore. The supply of dollars on the other hand is only constrained by Bernanke's will. The money supply M3 is growing around 16%-17% per annum.
The reason I chose gold is that it has been seen a store of value for thousands of years and most of the gold ever mined is still around. Yes extraction can be increased according to the price but only by a very small percentage unlike paper money that can be printed at any rate. In Zimbabwe inflation is over 66,000% and they have notes of at least hundreds of thousands of Zim dollars. Also gold is subject to finite limits just as oil and all other minerals.
The reason governments were keen to get rid of gold is that it removed their constraints and allowed them to inflate the economy to give an impression of growth. A properly run gold standard would provide stability and remove the need for floating exchange rates which are only of benefit to speculating dealers who add nothing to civilisation. Another restriction of a gold standard is that it makes it difficult for a government to finance a war - which might be of some benefit in modern times:-)
I don't know if I would call this 'the urge to hyperinflate'...this is called 're-flation'.
The credit crisis draining liquidity at an enormous and never ending rate.
This is just trying to put a stopper in the tub.
Far be it from me to write a word in defense of rich people, but I should point out that a lot of people didn't become rich by being spendthrifts. It is a well known phenomenon that some of the richest people are also the biggest tightwads around. The assumption that rich people will just bid up the price of energy so they can continue their consumption without any conservation is a questionable one.
Perhaps you have curtailed your energy consumption as gasoline prices went from $2 to over $3. If you have not materially reduced your consumption (I haven't), you and I both have "bid the price of energy up so that we can continue our consumption without any conservation."
Actually I am indeed driving less than I was when gas was just $2/gal.
So the move from $1